Bricks and APP’s — Redrawing Marketing’s Maps

The End of HIPPO?

Bricks & Apps

Redrawing Marketing’s Maps

The National Retail Federation, NRF, starts the ‘big show’ this Saturday, January 10th and runs through Wednesday, January 14th. The Consumer Electronic Show, CES, is in Las Vegas this week. Virtually every electronic item at the show is connected to the Internet, Smartphone or both, according to reports. Retailing and Consumer Goods Brands are entering the era of the ‘Consumer Vortex’, which I believe will result in a complete ‘shape shifting’ of marketing strategies and tactics. The next few years for many retailers and brands will be defined by fluidity and pure chaos. Disruptive Instability is the new brand / retail reality. Management practice so long dominated by the HIPPO (the highest paid person’s opinion) is over. The ‘Merchant Prince’ is dethroned. Companies and business leaders will have to recalibrate their assumptions, business models and career strategies.

Consumer are changing the rules for marketing.

New rules require new tools!

The consumer purchase pathway is changing.

Consumers are changing the rules for marketing.

New rules require new tools!

Let’s look at some trending facts:

Bricks

Shopping center retail space grew a 2 X the rate of the population for most of the last decade.

U.S. retailing has basically operated under the theory that the only way to growth was to build more or bigger stores. Today, the U.S. has an average of 23 to 46 square feet of retail space per capita, depending on the market. Compare that to India, 2; Mexico, 1.5; Canada, 14; Australia 6.5; France, 2.3 and Italy at 1.1.

McElroy NYT

The New York Times, on January 3, 2013 published a front page article, “The Economics (And Nostalgia) of Dead Malls”. The article states … “Nearly 15% are 10 to 40% vacant, up from 5% is 2006. And 3.4% — representing more than 30 million square feet — are more than 40% empty, a threshold that signals the beginning … of “the death spiral”. Take a look at this picture montage from the New York Times.

Drastic downsizing is about to happen. John Kernan, Coven & Co believes that shoppers are likely to see an average decrease in overall retail square footage of between 1/3 and 1/2 within the next 10 years. Sears has already closed 300 stores since 2010. J.C. Penny and Macy’s have also announced multiple closings. Impact example? Perhaps no retail niche is more relevant to the dynamics of change than book retailing. Anybody seen a Border’s Bookstore lately?

The inevitability of an aging U.S. population, the fact that the Millennials are ‘different’ than previous generations and the advent and near mass adoption of e-commerce are combining with other social and technological factors that make all that retail space – well – excess!

In the 2013 holiday shopping season, ShopperTrak reported a 15% decline in foot traffic vs. last year. On-line shopping was up 10 to 12 % according to IBM. In an apparent demographic jump, 45% of Walmart’s customers now also shop at Amazon!

In November 2014, according to a Mobile Commerce Daily article, RetailNext, saw an 11.4% decline in foot traffic vs. last year . (November is the most current data available as of this post.)

Breaking News 01/07/2014

Holiday Season Retail Sales – by APT Index numbers:

The nationwide APT Index of same-store retail sales showed sales up [+0.7%] for the 2014 Holiday Season, as consumers spent more at the register.

The Big Picture

Overall retail sales: [+0.7%]

Number of transactions: [-0.4%]

Average purchase amount: [+1.1%]

Pretty sure that this is not what retailers had hoped for. Interesting to see what the total holiday spend increase was and see if there is a shift from ‘things’ to ‘experiences’.

There will always be stores – someplace. But they are not going to be the same anymore and there will undoubtedly be a lot less retail brick and mortar square footage. But what’s the right mix of physical retail outlets and e commerce sites? Is Omnichannel a ‘must have’ retail technology investment?

Mobile accounted for 52.1 percent of traffic to retail Web sites on Thanksgiving Day, up 22 percent from last year, according to data from IBM Digital Analytics Benchmark. Mobile sales grew at even faster pace, up 25.4 percent compared to last year, accounting for 32.3 percent of online sales.

Sooo … all of the above means … What?

The customer is shifting from what they have predictably ‘always done’ to moving on. But moving on to where? Moving on to what? What are the strategies and tactics, the locations and services, the merchandise and prices, the technology, the media that will ensure that a retailer’s customers are served better than anyone else can serve them. Customer data – understanding the customer – chasing the ever changing customer is the requisite strategy for the future.

If you are going to map a strategy … you are going to need a new mapping technology. All of the gadgets at the CES are important because they provide the tools for consumers to change the rules. However, neither retailers or brands will be able to find their way through the disrupted maze without a Data Analytics Map. Data Analytics capabilities and data visualization is the new consumer path to purchase cartography. If you are going to the NRF show next week … take a few minutes and visit with with the ‘map makers’.